America is losing its once-healthy middle class and desperately wants it back. But how? Some say reviving manufacturing jobs. Some say redistributing existing wealth. Some say a universal basic income. Academics are fond of upskilling. Even U.S. CEOS are now saying they need to create more higher-paying jobs.
But what almost no one talks about is how we can improve the low-wage jobs mostly in the service sector that already exist.
Last year, nearly 42 million Americans, almost 30% of the workforce, had jobs in retail, food service, personal care, health care support, and cleaning and maintenance — all with a median hourly wage below $15. For 10 years, the largest occupation in the U.S. has been retail sales, with a median hourly wage in 2018 of only $11.33. It’s expected that between now and 2026, two of the fastest-growing job titles will be home health aide and personal care aide — with median hourly wages of only $11.63 and $11.55.
These workers struggle to pay for rent and health care, and are rarely able to save for retirement or emergencies. Many have unstable schedules, which affects not only their income but also their children’s education and their family’s health. Many are assumed by their employers to be, as one retail worker told me, “a dime a dozen, just human robots.”
Many of these dead-end jobs could be good jobs, offering living wages, better benefits, sane schedules and better opportunities. How do I know? Because several successful retail chains have already figured out how to do it.
At Quiktrip, a convenience store chain, a full-time associate in Tulsa, Oklahoma, starts at over $42,000. The average hourly wage in Costco’s U.S. warehouses is slightly over $23. Quiktrip and Costco design their operations to respect and leverage employees’ time, knowledge and capabilities. Yes, it’s a big investment of money and effort in the front-line labor force, but with an even bigger return in productivity, customer loyalty and adaptability.
If the Business Roundtable, the American association composed of the nation’s leading CEOS, is serious about companies serving their employees and communities and not just their shareholders, members operating in low-wage sectors need to prioritize raising wages, and respecting their workers and the work they do. Company boards and investors need to give these CEOS their support.
Change isn’t easy, but it can be made if CEOS prioritize it. From 2014 to 2017, Mud Bay, a pet-supply retail chain in the northwestern U.S., raised wages by about 30%, implemented an employee stock-ownership plan, increased the percentage of employees working over 30 hours a week (and hence receiving benefits) from 65% to 82% and made many changes to work design. The results were impressive: a 35% reduction in employee turnover, increased productivity and a nearly 50% increase in same store sales growth.
Over the past 100 years, many manufacturing jobs have been transformed into well paying, desirable jobs. A similar transformation is now possible and badly needed in the service sector. If the opportunities are seized, we will see not only a stronger middle class but also stronger companies with a workforce that is prepared for the challenges that new technologies and new competitors are sure to bring.
